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ELLIOTT WAVE ANALYSIS - Latest Market Commentary

Stock Indices

During recent declines from the March/April highs, many U.S. stock markets have declined in either three or seven price-swings. As reported in our previous update, these wave structures can still represent the preliminary sequences of a more sustainable multi-month counter-trend decline that is assigned a high probability event basis cycle and wave analysis. For those indices that declined only in three price-swings, and this includes the S&P and Dow Jones (DJIA), the secondary highs become vitally important resistance in maintaining a more immediate bearish outlook. Last week’s rallies from the mid-month lows have now approached these significant levels at 1872.53 and 16384 (futures) respectively. An immediate downward price rejection would confirm the next stage of declines is already underway but a break above would otherwise confirm the prolongation of the preceding uptrend with the consequences of yet another record high during the next few weeks. In the event that the S&P stages an immediate decline without breaking the overhead resistance, then next downside targets remain towards 1724.75. A break above the resistance would project upside targets to 1931.33. It is worth noting that one of the underperforming stock indices is the U.S. Biotechnology index. This formed a low last Tuesday at 2168.08 having declined from its late February high by 24.5% - ###more importantly, this decline has unfolded into a clearly visible five wave impulse pattern that confirms a multi-month corrective decline is already underway. This is an important comparison when we oversee the short-term development for the S&P and Dow Jones. Meanwhile in Europe, the Eurostoxx 50 futures have declined from their April 4th highs into a five wave pattern that confirms a larger directional change has occurred to the downside. Like the Biotechnology index, a counter-trend upswing is currently in progress but this has natural upside limitations and so we do not expect a prolonged recovery, rather a more restrained struggle higher during the next couple of weeks prior to resuming lower. In China, the Shanghai Composite index illustrates the approach of completing a multi-month contracting symmetrical triangle pattern within its larger ongoing declines. There is an imminent risk of a sharp accelerative decline out of the triangle during the next week or two. We expect a decline of approximately 25% during the next 2-3 months. 21st April 2014

Financial Updates Currencies

Currencies (FX)

After the successful defence of the April low of 7933, the US$ index is in a very favourable position to stage a strong advance. This is due to the assumption that from the Oct.’13 low of 7899 a triple 1-2 sequence has crystallised – the first with an advance to 8148 and the following downswing to 7926, the second to 8060 that was counter-balanced by a sharp sell-off to 7933, and the third just during the last trading days: a rally to 7990 that was followed by the decline to 7958 which is right at the fib. 61.8% retracement at 7955. A break above 7990 should be accompanied by increasing upside momentum and acceleration as the US$ is expected to enter the 3rd of 3rd of 3rd. This reinforces our larger outlook with ultimate targets remaining unchanged towards 8885+/-. The corresponding scenario for the Euro/US$ advocates much lower price levels during the next months. As the finalising ‘C’ wave of a larger expanding flat pattern is shown in the early stages of its development, modest fib-price projections measure to 1.2528. Shorter-term, the April high of 1.3906 is seen as the completion of a multi-day expanding flat counter-trend sequence that depicts an almost textbook-like fib-price ratio adherence. Now, the Euro is likely to enter its 3rd of 3rd within the ‘C’ wave of the flat sequence. Meanwhile, Sterling was successful in staging another high – recent price action propelled it above the 1.6824 high of February. Two short-term scenarios are likely### – the first suggests a more immediate reversal from current or slightly higher (1.6857+/-) levels whilst the second prolongs the March upswing towards 1.6965 as a double zig zag sequence. Both scenarios however advocate a sustained sell-off in the months ahead as the advance from 1.6461 is seen as wave ‘B’ within an ongoing expanding flat pattern correction. Ultimate downside for wave ‘C’ to follow remains at 1.5888. Recent price action for US$/Yen has corroborated the downside momentum that is expected to pull the currency pair lower towards 9242-12 in the months ahead. The only ambiguity currently evident is the depth of the counter-trend rally from 10132. Whereas the preferential outlook favours a reversal from current levels to be followed by downside acceleration, the alternate scenario allows for a deeper retracement towards the fib. 61.8% resistance prior to a continuation lower. 21st April 2014

Financial Updates Bonds

Bonds (Interest Rates)

During recent declines from the March/April highs, many U.S. stock markets have declined in either three or seven price-swings. As reported in our previous update, these wave structures can still represent the preliminary sequences of a more sustainable multi-month counter-trend decline that is assigned a high probability event basis cycle and wave analysis. For those indices that declined only in three price-swings, and this includes the S&P and Dow Jones (DJIA), the secondary highs become vitally important resistance in maintaining a more immediate bearish outlook. Last week’s rallies from the mid-month lows have now approached these significant levels at 1872.53 and 16384 (futures) respectively. An immediate downward price rejection would confirm the next stage of declines is already underway but a break above would otherwise confirm the prolongation of the preceding uptrend with the consequences of yet another record high during the next few weeks. In the event that the S&P stages an immediate decline without breaking the overhead resistance, then next downside targets remain towards 1724.75. A break above the resistance would project upside targets to 1931.33. It is worth noting that one of the underperforming stock indices is the U.S. Biotechnology index. This formed a low last Tuesday at 2168.08 having declined from its late February high by 24.5% - more importantly, this decline has unfolded into a clearly visible five wave impulse pattern that confirms a multi-month corrective decline is already underway. This is an important comparison when we oversee the short-term development for the S&P and Dow Jones. Meanwhile in Europe, the Eurostoxx 50 futures have declined from their April 4th highs into a five wave pattern that confirms a larger directional change has occurred to the downside. Like the Biotechnology index, a counter-trend upswing is currently in progress but this has natural upside limitations and so we do not expect a prolonged recovery, rather a more restrained struggle higher during the next couple of weeks prior to resuming lower. In China, the Shanghai Composite index illustrates the approach of completing a multi-month contracting symmetrical triangle pattern within its larger ongoing declines. There is an imminent risk of a sharp accelerative decline out of the triangle during the next week or two. We expect a decline of approximately 25% during the next 2-3 months. 21st April 2014

Commodities

Gold failed to trade higher during the last days which is in line with the strong downside momentum evident in 3rd waves, and the sell-off from 1331.21 to 1285.49 might well have begun a multi-week 3rd wave within a five wave expanding-impulse decline that is expected to pull prices lower towards 1100.00+/-. Shorter-term, there is some ambiguity about the depth of the smaller second wave counter-trend rally from 1285.49. It might already have completed but the lack of fib-price ratio measurements forewarns of an additional attempt higher which could push prices towards 1312.75-16.55. The risk however is clearly to the downside and that is why the preferential short-term outlook favours an immediate reversal from current levels to resume the larger decline. Silver is also pointing lower – although the 19.24 low acts as support, it is likely to be broken as wave ‘A’ of the finalising zig zag sequence within a double pattern is underway. Ultimate downside objectives are measured to 17.48-30 in the months ahead, measured basis a fib-equality ratio between the Aug.-Dec.’13 decline and the downswing from Oct.’13.### A failure to break below 19.24 would otherwise highlight the possibility of a tightening trading range during the next several weeks and imply that wave ‘X’ which separates the two zig zags did not end at 20.40 but is unfolding into a contracting symmetrical triangle. Oil’s hesitancy to stage a reversal short of the critical 105.22 high suggests a break higher and therefore shifts the probability towards an expanding flat in progress from the 105.22 high. This renders the current advance from 97.28 as wave ‘B’ within this pattern with immediate upside potential to 107.19+/- prior to a reversal and finalising sell-off to 94.41 that would synchronise with forecast declines for stock indices. The most important thing to remember is that a break above 105.22 would negate the larger expanding flat sequence that dates back to the Sep.’12 high of 100.42. Thus, this pattern would be changed to a running flat that already completed at 91.24. Consequently, this support should not be exceeded prior to oil trading into higher highs. 21st April 2014 .

LATEST ARTICLES

OUTLOOK & FORECASTS FOR 2013

Highlights:

  • The 2013 outlook for global stock indices and commodities remains very bullish and is entering the last stage of the ‘inflation-pop’ phase that originally began from the post-financial crisis lows of 2008/09
  • This is expected to ignite another period of asset buying that increases risk-on multiples by a minimum 45% per cent and in some cases as much as +300% per cent, sending some global stock indices and commodities into record highs
  • Shorter-term, there is a danger of a downward adjustment of -5-8% per cent, but then sharp price advances to resume
  • Commodity related stock indices and equities are expected to outperform as a sector during the next 12-16 months
  • Banking stocks to participate, but most will not exceed their pre-financial crisis highs

As always, this year’s Outlook & Forecasts for the next twelve months are created applying the Elliott Wave Principle for the assessment of pattern and price amplitude, also Cycle Analysis for the timing of the larger trend reversals. Not always do they jive, but they seldom contradict and more often, provide valuable insights into one or two variations of a similar theme within a seemingly unlimited amount of possibilities.

Even though this report outlines the price expectancy of all asset classes for 2012 it will also illustrate how this coming year fits together into the larger picture. The reasoning behind this is to move away from the 'black-box' stereotype and show you why the results relate to their specific outcome. Overall, this report deals with two different time-periods – long-term and inter-mediate term. Long-term refers to the uptrends from the Great Depression of 1932 onwards and inter-mediate term for the coming year and into 2013.

HOW TO INTERPRET EACH ELLIOTT WAVE CHART

What do you see when looking at an Elliott Wave chart? Just lots of numbers & letters overlaying the price data? – or do you see definable patterns that are immediately familiar? And how do you interpret the results of the analysis and put it into an effective trading plan? Read on and test your own knowledge of these subjects and much more...

A COMMODITY SUPER-CYCLE?

Recent reports of a Commodity Super-Cycle grabbed my attention for two reasons – first, this is diametrically different to the outlook I foresee developing during the next decade, and second, this terminology has surfaced at a time when various commodities have already undergone large percentage gains measured from the Feb.'09 lows

THE 'DEFLATIONARY SCENARIO'

The primary theme of this presentation focuses on a 'Deflationary' outlook, forecast as the dominant aspect continuing during the next decade. This is derived from analysing the Elliott Wave pattern structure of the CRB (Cash) Index during its expansionary period of the last 76 years.

THE 'FLASH CRASH'

The Update Alert! messaging service of EW-Forecast Plus responded to the sharp collapse and the following recovery of US stock indices during the volatile trading session on the 6th May.

OUTLOOK FORECASTS FOR 2011

This analysis centres around the S&P 500 that is used as a proxy for other global indices. The great bull market beginning from the 1932 low ends 68 years later in 2000 - other global indices peaked later in 2007 (75yrs) – some still continuing to progress.

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TESTIMONIALS

"I just wanted to congratulate you on the EW-Compass reports launch. I'd say all the work you've all put into this project is well worth it… never cease to be amazed by the harmony that you find between the fib relations you highlight and the Elliott count you propose. You are a true descendant of RNE, and I'm quite sure he'd have really loved to see your work… Another aspect that sets you apart is your deep knowledge of the how and why of pattern relationships between higher & lower degrees of the same price action. So much to learn there". - T.S.

ELLIOTT WAVE PATTERN

INTRODUCTION TO THE WAVE PRINCIPLE

The Wave Principle, often referred to as Elliott Wave is a unique methodology that applies Natures Laws, those encompassing the Natural Sciences and Universal Geometric Philosophies to the financial markets. It allows us to view price fluctuations as an organised process that can be non-linearly extrapolated to gain a glimpse into the future direction of trends, counter-trends and amplitudes on any market or contract traded around the world.

Expanding Diagonal Patterns - Do they actually exist? - Elliott's inclusion of the Contracting Diagonal

In R.N.Elliott's original treatise of "The Wave Principle (1938)", he introduces us to diagonal patterns for the first time on page 21. Under the heading, Triangles, Elliott describes the difference between horizontal triangles that represent hesitation within an ongoing, progressive trend and diagonal triangles that form the concluding 5th wave of a larger five wave sequence.

NEWS & EVENTS

Tradersworld Online Expo #12 – Starts 12th November 2012

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 12th Trader Expo held online for 7 weeks starting on 12th November 2012 and ending in the new year on 6th January 2013. Peter’s presentation is entitled “Elliott Wave Price Forecasts & Cycle Projections – Three Phases of the 18 Year Bear Market ~ ‘Shock–Pop–Drop’” for more information visit http://tradersworldonlineexpo.com/

Announcement: 123rd Battery Council & Trade Fair Convention in Miami, 1-4 May 2011

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 123rd Trade Fair Convention of the Battery Council in Miami, 1-4 May 2011. Peter’s presentation is entitled "The Historical Price Trend of Lead and Applying the Elliott Wave Principle to plot its course into the Future".

ELLIOTT WAVE PRICE-FORECAST UPDATES